Federal Minister for Finance, Dr Abdul Hafeez Shaikh said on Friday notwithstanding eight big inherited challenges, the government’s prudent polices brought about macroeconomic stability, reduced inflation to single digit, maintained fiscal discipline, created jobs, doubled revenues and bolstered the vulnerable segment of the society.
The government focused on sound monetary policy to bring down inflation rate and ensured fiscal discipline by taking austerity measures, he said while talking in a talk show on Pakistan Television.
The inflation rate has been reduced from the peak 25 percent in 2008 to 9 percent now, which he described as a great achievement of the government.
On the other hand, the government implemented fiscal discipline which is evident from the fact that as compared to 10-11 percent increase in inflation rate, the federal government expenditures have gone up by just 6 percent while that of provinces increased by 21 percent.
These expenditures included defence, payback loans and civil government expenditures, which he said remained stagnant at Rs 200 billion.
Giving details about the performance of revenue collection system, the federal minister said that the tax collection has been more than doubled from Rs 1000 billion to Rs 2300 billion during the past four and a half years.
The Federal Minister for Finance, Dr Hafeez Shaikh said the tax collection ratio has increased by 21 percent as Rs 350 billion additional revenues was collected in the financial year 2011-12.
The government is following the strategy of self-dependence and in this regard more and more new tax payers are being brought under tax net.
He said there were some sectors which were enjoying zero rating facility but have now been brought under tax.
Dr Hafeez Shaikh said the people who are not paying their due taxes and non-filers will be brought under tax net, whereas the people who are already paying their taxes are being facilitated by reducing tax burden on them.
“In the current fiscal year’s budget, we have done away with many taxes and tax slabs have also been reduced to benefit the tax payers”, he remarked.
He said that this year, the focus would be on expanding income tax base while the government during the past year had focused on sales tax and had brought about many changes in the overall taxation system.
On the other hand, the borrowings of the government have also reduced as compared to its income, he said and added the country’s income was Rs 10,000 billion four years ago, which is now Rs 20,000 billion.
“If borrowings have increased, the income has also increased,” he said and added that the government cannot borrow more than 56-60 percent of the GDP.
The government did not forget the poorest of the poor as three million vulnerable families were provided social safety net under Benazir Income Support Programme (BISP) for which the country is being appreciated the world over, he said adding the programme would help empower women.
The federal minister said that the overall growth rate decreased by 2 percent due to floods which caused damage amounting to 10 billion dollars.
However, he maintained that the economic expansion has been reducing all across the globe. Citing example of India’s growth which is forecast to remain under 5%, with China 6%, Europe and the United Kingdom in negative while the United States 2%.
He said that the government has regularized 3,000 contract government employees and reinstated 30,000 employees.
He said that the government has launched about 650 projects worth Rs 3000 billion during the past four years which created jobs and would help in the over all development of the country.
Talking about the challenges of food security, he said that Pakistan has been far better than many countries in this sector.
Going back to the past, the Finance Minister said, when the present government came into power, the economic growth momentum was slowed down while the GDP was at 2% in 2008 with inflation touching the highest 25%.
The country’s stock market was almost closed while there was big burden on current account and fiscal discipline and the foreign exchanges were reduced as low as $ 5 billion.
It was this situation when the government had to take hard decisions and go to International Monetary Fund for loan under a standby agreement.
Dr Hafeez Shaikh said that human resource development, export capabilities and private sector growth were imperative for growth and above all, the rule of law was most important to ensure growth and stability.
Dr Shaikh said that the government had laid down strong foundations for the prosperous future of Pakistan and “new Pakistan is emerging.”
Institutions are independent in their domain as the Bank of Pakistan, Securities and Exchange Commission of Pakistan, Competition of Pakistan, Courts and other institutions including media are independent which is a positive development towards bright future.
He said that democracy is back on tract, Constitution has been restored, parliament is strengthened, provinces were made autonomous and a good political culture has been created where institutions work in their respective domain.
The finance minister termed the 18th Amendment and National Finance Commission award as two historic decisions of the present government, which would help build a prosperous Pakistan.
The federal minister for Finance said that although the responsibilities of provinces have increased as the federal government has provided Rs 5000 billion to them to manage their affairs.
Copyright APP (Associated Press of Pakistan), 2012
Story first published: 10th November 2012